Briefing Doc – 18F-H1817018-REL-RHG
Briefing Document: Servilla v. Village of Oakcreek Association (Case No. 18F-H1817018-REL-RHG)
Executive Summary
This briefing document analyzes the Administrative Law Judge Decision in the case of Scott Servilla versus the Village of Oakcreek Association. The final order, issued on January 9, 2019, after a rehearing, denied the Petitioner’s petition in its entirety. The central finding was that the Petitioner, Scott Servilla, had waived his right to challenge procedural defects in a November 10, 2016, homeowners association vote because he failed to raise his objections prior to the vote being held.
The core of the dispute involved a ballot that combined two distinct proposed amendments—one concerning leasing restrictions and another regarding a schedule of fines—into a single up-or-down vote. While an initial decision found that this ballot format violated Arizona statute A.R.S. § 33-1812(A)(2), it concluded no remedy could be ordered. After a rehearing was granted, the Administrative Law Judge (ALJ) based the final denial on the legal doctrine of waiver, citing the Arizona Supreme Court precedent in Zajac v. City of Casa Grande. The ALJ concluded that since Servilla received the ballot over a month before the vote, he had ample opportunity to object to its format but did not. He could not, therefore, wait to see the unfavorable result before lodging his complaint. This decision is binding on the parties, with any appeal required to be filed in superior court.
Case Overview and Participants
This matter was adjudicated by the Arizona Office of Administrative Hearings following a petition filed with the Arizona Department of Real Estate.
Case Detail
Information
Case Name
Scott Servilla & Heidi H Servilla vs. Village of Oakcreek Association
Case Number
18F-H1817018-REL-RHG
Hearing Body
Office of Administrative Hearings
Presiding Judge
Administrative Law Judge Tammy L. Eigenheer
Key Participants
• Petitioner: Scott S. Servilla, who appeared on his own behalf.
• Respondent: Village of Oakcreek Association, an Arizona association of 2436 homeowners, represented by Mark K. Sahl of Carpenter, Hazlewood, Delgado & Bolen LLP.
Procedural History and Allegations
The case involved a petition filed on November 13, 2017, which evolved to encompass three distinct allegations after the Petitioner paid an additional filing fee. Following an initial hearing, the Petitioner requested and was granted a rehearing by the Commissioner for the Arizona Department of Real Estate on or about September 21, 2018. The rehearing took place on November 29, 2018, after which the record was held open until December 20, 2018, for the Petitioner to file a response.
Petitioner’s Three Core Allegations
The Petitioner’s claims, as set forth in the petition, were:
1. Improper Vote Count: The vote on November 10, 2016, allegedly violated A.R.S. § 33-1817(A)(1) and the Master Declaration because it failed to achieve the 1173 votes required for a majority to amend the declaration.
2. Improper Ballot Format: The written ballot for the November 10, 2016, vote violated A.R.S. § 33-1812(B)(2) because it “did not provide a separate opportunity to vote for or against each proposed action.” This was the central issue of the rehearing.
3. Illegal Fines: The Association allegedly violated its By-Laws (Section 8, Article VIII) by imposing fines greater than $50 per violation, particularly after members had voted against an amendment to raise this limit.
In the initial decision, the ALJ found the Petitioner failed to prove his claims on issues one and three. While the ALJ found a statutory violation regarding issue two (the ballot format), it was initially determined that no remedy could be ordered, which prompted the successful request for a rehearing.
The Disputed Vote of November 10, 2016
The case centered on a vote taken at a Special Meeting of Members to approve a “Leasing and Schedule of Fines Assessment.”
• Combined Proposals: The absentee ballot presented members with a single proposed amendment that bundled two separate changes to the Master Declaration:
◦ Leasing Restrictions: The addition of a new section, 4.23, which established a minimum lease term of 30 days and prohibited leases of less than an entire lot or unit.
◦ Schedule of Fines: The complete replacement of an existing section, 5.08, which permitted the association’s committee to adopt a schedule specifying fines for violations.
• Ballot Format: The ballot provided a single choice for members to vote either “FOR THE LEASING AND SCHEDULE OF FINES AMENDMENT” or “AGAINST THE LEASING AND SCHEDULE OF FINES AMENDMENT.”
• Vote Results:
◦ Total Ballots: 1067 were received (approximately 44% of members).
◦ Outcome: 564 voted in favor of the amendment (approximately 53% of votes cast).
Central Legal Analysis and Ruling
The final decision after the rehearing did not revisit the merits of whether the ballot was statutorily compliant. Instead, it was based entirely on the legal doctrine of waiver, which precluded the Petitioner from bringing his claim.
The Doctrine of Waiver
The ALJ’s conclusion rested on the precedent set by the Arizona Supreme Court in Zajac v. City of Casa Grande and Allen v. State. This legal principle holds that a party who is aware of a procedural defect in an election or vote prior to its occurrence cannot remain silent, wait for the outcome, and then challenge the process if the result is unfavorable.
The decision quotes the principle from Zajac: “one cannot knowingly let a defective vote proceed only to complain and seek redress if the results are not to the individual’s liking.”
Application to the Petitioner
The ALJ applied this doctrine directly to the facts of the case:
1. Awareness of the Defect: The Petitioner acknowledged receiving the absentee ballot on or about October 4, 2016.
2. Opportunity to Object: The vote was not held until November 10, 2016, giving the Petitioner over a month to raise an objection to the ballot’s format.
3. Failure to Object: The Petitioner did not raise any objections to the manner of the vote until April 2017, long after the vote had concluded. The petition itself was not filed until November 13, 2017.
4. Conclusion of Waiver: Having failed to object in a timely manner, the Petitioner was deemed to have waived his right to challenge the ballot. The ALJ stated, “He cannot have it both ways; that is, he cannot allow the [vote] to proceed without objection, and then be permitted thereafter to assert his protest.”
Because the Petitioner’s claim was barred by the doctrine of waiver, the ALJ concluded that his petition must fail.
Final Order and Implications
Based on the foregoing conclusions of law, the Administrative Law Judge issued a definitive order.
• The Order: “IT IS ORDERED that Petitioner’s petition is denied.”
• Binding Nature: The decision notes that as an order issued as a result of a rehearing, it is binding on the parties pursuant to A.R.S. § 32-2199.02(B).
• Appeal Process: Any party wishing to appeal the order must seek judicial review by filing with the superior court within thirty-five days from the date the order was served.
